Use the compound interest formula to compute the total amount accumulated.
-$3500 for 6 years at 5.5% compounded monthly
A) $3891.78
B) $3597.36
C) $4864.72
D) $33,667.34

Question

Quizplus · Accepted Answer

The compound interest formula is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($3500), r is the annual interest rate (5.5% or 0.055), n is the number of times that interest is compounded per year (monthly compounding means n=12), and t is the time the money is invested for in years (6 years). Plugging in the values: A = 3500(1 + 0.055/12)^(12*6) = $4864.72.

Use the Compound Interest Formula to Compute the Total Amount